>> welcome to money moves, where we focus on alternative assets. i'm deirdre bolton. we show you what investors and entrepreneurs are doing. often thats not activism and retail going the same phrase. we're going to tell you what choices the company has. also filling you in on some of the firms. a first on bloomberg -- the cofounder of the equity firm is going to be here.

he is going to tell us how he plans to double the size was $4 billion business within the next five years. the company the just announced a partnership with google next. we are on the strategy on the way. we want to get you down to d.c.. the report card on the economic districts.2 fed our chief washington correspondent is with us now with more. after thatew days disappointing jobs report, the suggests we may still have reason to continue to taper their bond buying. reports from the 12 districts suggest economic activity continued to expand across most regions and sectors. two thirds noted an increase in

hiring. nine districts said that the economy was growing at a moderate pace. conditions improved over the. the outlook across the districts was genuinely -- generally positive. they said the outlook was positive, with most reports setting expectations of more of the same. real estate continued to improve, although if you districts did report some slow growth in sales. most noted there was some small price gains and manufacturing continuoes to improve. reportedne district about growing sales and an optimistic outlook. drilling robust activity in the atlantic.

-- no bank loan volume. hangeed prepares to c leaders at the end of the month. -- theyestate related lined up to buy time warner. it appetite is hearty for commercial real estate. editor me now is the of bloomberg link. first of all, why are these sovereign wealth fund so interested in u.s. property? >> it is interesting to look at the funds because they have a huge ofunt of money -- billions dollars -- what they're looking to do in many cases is diverse of five. that means be different from

lots of investors that we see in estate equity and real and public pensions that are looking to pay out some sort of obligation. this is the diversification play. they obviously see some value in u.s. real estate. note, some key properties. >> what we're talking about is the time warner center. anybody that has been to new york and has been around central park has seen this iconic building. home of time warner inc.. they're going to be moving to the new hudson yards development. you mentioned at the top of this is a deal that related companies -- they are the developers of hudson yards, which is the biggest commercial development going on in the united states right now. time warner will be a part of

that. in the meantime, we will see -- five years from now, who will go into that building that any visitor has seen and taken in. >> what is the endgame for these sovereign wealth funds? they have a lot of cash and they can do ploy it. what is the endgame other than making money? >> it is interesting to watch their evolution over the last 20 years or 10 years. they come at it from a diversification standpoint. they're using a lot of these investments in these relationships with folks like do a lotblackstone, to of learning about how to invest. whereas a public pension is really just giving these guys money and getting the return. through theiria related fund, they are building

up these teams to do direct investing. they are building their own private equity and real estate empires. that gives you a little bit of a being andreason for acting a different way with your investors. it is more of a hub than an arms length. >> thank you very much. jason kelly joining us there at bloomberg link. from one brand of investing to activist investing -- the struggling chain is looking for options and seeking advice from at least two private equity firms, according to people familiar with them. where is the pressure on eric to sell or be taken right of it coming from? >> it comes from his partners. you could describe them as one of the most active and colorful activists we've ever heard of. he is based here in new york. he has been highly active in

canada. he makes songs about the company to put pressure on. they kicked up the pressure on eric in november. they put pressure on the chain to sell. according to people close to the matter, as teacher mentioned, he is looking at two private equity firms. in the interest of not only private equity firms, but banks to provide to push back against the activists. least one higher profile superstar activist investor was in there for a while -- david iron or. a littleview is different. it could be their timing, that crescendo has placed directors on 20 out of 22 companies.

they see it as an undervalued company. it fits two of crescendos five reasons for pressuring the company to sell or restructure, which are data management -- bad management to entrepreneurs that can no longer handle a growing business. -- they moveisions in when they see that a company needs to be sold or undergo restructuring. that includes buying back shares, offering dividends -- eric said that he sees this as four.ample of two of 8% stake.an eigh crescendo really believes that activism is on the rise. they have that strategy am a but

they feel that there is more competitors as well. >> yes. have been doing this for 30 years. institutions and investors see that it works and eric will be joining us right here on money moves. host will talk about canada and his strategy. >> thank you. we're going to bring in a kind of canadian. bob rice is joining me now. he is the managing partner and my cohost for this hour. no often that we get to link canada and florida. this is this powerhouse firm that very few people have heard about. >> partly it is because they started in canada. nice thatans are so other people won't do this kind of deal. it is a funny way to find your

deal flow. most of the companies that they have approached frankly say, yes. these guys are the kinds of people who start off with creating a secret stash of stocks and sending a nasty letter. they like to go to management first and say, look, we are coming. don't you just go ahead and agree right now? >> that seems very polite. >> and very effective. they are doing several things. they're going after smaller, middle tier companies tha and approaching them in this way. 20 companies said, ok, come on board. realizing their own vulnerability. maybe there are some suggestions to be made that could make us perform better. it is very refreshing to see that sometimes and business networks. >> exactly. there is of course a hammer

inside the velvet glove. there are other things going on here as well that helps make christian no successful. one of them is that they tend to work a lot with other, smaller activist firms. they travel in packs these days. you work one deal with the firm and in the next time you went to do a deal you start to talk to that firm. just as you have with the case firms arel of the creating positions in the company. pretty soon come you have the authority of the shares. >> you're going to stay with me this hour. we're going to take a quick break. then, of course, more on money moves. ♪

>> we turn our focus now to a firm that specializes in investing in software. bravo is a private equity firm that manages a series of funds with more than $4 billion in equity commitment. joining us now from san francisco is

orlando bravo. he is a managing partner. we are pleased to have you with us. also with me here is bob rice, managing partner and my cohost hour.his do you feel like a lone wolf in your sector? normally when we talk about private equity, we're usually not talking about software investing. >> fortunately, not anymore. we felt like a lone wolf and we 2000-2005.ck in other has been an increased interest in software. there's quite a bit of competition and prices up moved up significantly over the last 6-7 years. >> where are you finding opportunity where you feel like you can still be competitive? >> there is increasing competition in the industry. the nice thing about software is that there are thousands of companies to buy, whether it is

application software, infrastructure software, security software. there is so much change in the industry that you can always get into a new curb of investing. so many innovations, particularly in security software. we have a watchlist of 2000 companies that we track on a quarterly basis. while there is more competition, there's so much innovation and so much growth that we feel there is always opportunity for us. >> would you describe for us a little bit about your specific strategy? more than simply finding the companies that buy coming of a very clear idea of what you want to do to maximize the value of these companies. >> perfect. what we target is we target companies that have greater than $100 million in revenue all the to $3 billion. look for high-quality of

revenue, which means 50% more of the revenue comes from customers and a recurring nature stream in which you can increase prices. our specific strategy on the businesses three parts. first, we execute an immediate operational improvement, which means maximizing earnings the day we close that deal. we typically generate a 10%-20% increase immediately and the earnings of the companies we buy. the second phase is investing significantly in organic growth programs. that usually means restructuring the sales force and the distribution channels. the third part is doubling the size of the business through acquisitions. that part is how we got into software 13 years ago. is a growing market, whether it is oracle or private equity.

do,fun part about what we which makes it the opposite of activist investor, is that we accomplish our plans only in partnership with the existing management of the companies we buy. we take the knowledge of their customers, the following they have from their employees, and on our metrics to achieve the outcomes that we want. >> i know you just raised and then closed a fund. what was the fundraising like? how difficult is it to reach out to lp or investors? >> it is all over the place. the industry over the last year has become incredibly inefficient. if you have been lucky in the recent past, then you have good numbers, it is actually quite easy. quite easy to raise capital.

whether it is from your existing investor base or new investors. if your numbers are ok, even if they're just a bit above average, takes years to raise a private equity fund. we are really lucky in our recent fund. our fund raising a couple years ago went very quickly. >> as always, it helps to have a track record of success when you are looking to raise capital. thank you so much for joining o., orlando brav when we come back, private infrastructure spending boomed last year. the cofounder of capitalizations will be here to tell us what he sees and years ahead. ♪

>> last year there was a sharp

drop in state infrastructure spending because the government cut spending. our next guest says that the opposite was true in the private infrastructure sector. michael underhill is here. he makes investments in agriculture and other hard assets. bob rice is here as well. we have been chatting about some of the things you've been doing. $1 billion in asset management. >> you look at the index -- >> we have a chart of that. >> 30% upside. we have a lot of the private -- public equity markets. we look at the private funds come you had an enormous amount of fundraising. what we're looking at his transportation assets, communication assets, and things like water and waste deals. how do you account for the

difference between government spending and private spending? investment from government and investment from the private sector. the the fiscalat fiscal deficit issues -- it is played out through history. the story has played out twice before the past. we look at privatization of infrastructure and sources of capital, private an infrastructure funds come it is a natural solution. i have to give bob a chance to jump in because he is wild about some energy infrastructure. it is difficult to find yield otherwise. --distinguish between mystery

look at upstream, midstream, and downstream, there is a variability of cash flow. when you look at upstream, you look at the variability of cash flow, you're going to see higher volatility. >> upstream means what? and production, different types of high-risk strategies in which you see an opportunity to both make a significant amount of money and lose a significant amount of money. downstream, you look at things like transportation, logistics, things like that. you have a higher variability of cash flow. midstream space has been where investors have focused because the lower volatility of cash flows, the certainty of cash flows, and the certainty of returns. little more a expertise to invest in upstream and downstream. >> exactly. when you look at evaluations where they are, the index itself, it has had a great

run over the last five years. now they say it is going to be a partnership selection process. , youeam and downstream have to look at volatility and leverage as well. >> one important idea for investors in this infrastructure space in the new year -- what is it? >> when you look beyond transportation, shale gas. it is nothing new in terms of her phrase, but we look at the enormous amount of infrastructure that needs to occur, you see $34 billion worth issuancership equity last year. this year, we are forecasting $40 billion. so you're looking at shale gas pipelines and railroads. >> wonderful to see you. thank you for joining us. we're going to continue our conversation with bob rice. a quick check in the markets. green on your screen. high, no00 had a

longer there. you did have the world bank increasing, raising its global growth forecast. that in fact is helping. we are back in a few minutes. ♪

>> this is money moves come a war we focus on innovative alternative investment. i am deirdre bolton. here are your top headlines. banks should show that they received capital worth six percent of assets in stress tests. eurois according to twwo o euro officials. profits forbanks, drupal that bank of america. they reduced the amount of money they're paying out due to the mortgage meltdown.

still, the bank faces two federal lawsuits involving mortgage tax security. capping the smallest annual increase in five years. companies are facing little pressure to charge more. we're going to turn our now to the pioneer in the home automation business. 60 consumer electronics manufacturers including tivo and sony have already adopted technology that allows you to turn your house into a "smart house." trading is at an all-time high. this is a day after google announced it was getting in on the action with the purchase of the smart thermostat maker. the ceo and president of control for is with us. guys is a crazy -- you have met before. not only met, but have done business before. >> we worked together in the

90's. bob had a company called rotund geometry. i wanted to have it to my joined my company, viewpoint. years later, sold viewpoint to computer associates. bob body viewpoint from computer associates. it all comes together. >> we were doing 3-d visualization in the 90's. >> you had two kinds of investments, early, and way too early. i want to talk about google's purchase of nest. what does this do for your company? >> the connected home is expanding opportunity for all of us. every device with a battery or power cord is going to be network aware. orchestrateo connected devices so they work

together to improve homes and familys'lives. nest is an innovative company that reinvented the thermostat. one of the many thousands of workss that control4 with. >> your stock looks great. give us the creepy paranoid , we knowhere we see why google wanted to buy a nest. they want eyeballs in your living room. -- stock looks good so >> the connected home is a phenomenon that is not going away. consumers want their devices to work together. those that provide solutions need to respect their privacy and security. that is very high priority for us. >> how much time are you spending on those issues question mark from press reports come it seems like any ceo that is anywhere near this area,

these are conversations you have to be having. >> we absolutely have them in our meetings we work with our privacy. channel about is a very serious matter for us. we take it to the middle of our core. we are comfortable with continuing that commitment. >> tell us how you're going to win this market. you have a protocol out there that seems to be getting pretty good pickup. there've been an awful lot of companies from microsoft at&t to motorola who have tried to in this market and have failed time and time again. why is it going to be any different with control4? >> our protest been to work directly with homeowners who are professional channel with the software platform and architecture that enables third-party products to connect with us. we publish all of our interfaces so that the world can write the software needed to connect their

products with hours. that has produced an ecosystem of 7000 connectable devices from hundreds of manufacturers. we are the leader in operability and making connected homework. we are off to a very good start. i see that continuing. nest chose us to be the very first company when they open their system. we will continue to work with them. we have worked with google and android, as well as hundreds of other manufacturers. we are doing the work to deliver solutions to homeowners. we are doing it in a step-by-step way and meeting demand as it grows. >> you mentioned the 60 companies. we have some logos up. two and sony are just that stick out my mind. how difficult was it to form relationships with those companies question mark what they want from you? >> i think everybody sees the theected consumer, connected home emerging.

technology that we are providing to these manufacturers is technology in the area of simple discovery. simple discovery for their devices. >> you can have the best technology in the world by basically, if you are tired or distracted, the person can use it. >> it also ought to be technology that is integrated bull quickly by the manufacturers. if you show up with heavy technology, they are not going to integrate readily. , with noed liberally royalty. it is much more than injection into the development process, rather than a whole project itself. it makes it easy -- >> one of the things that is going for you right now is that the whole mobile device thing -- everybody has a phone out -- they can be integrated into the os directly. people have the controller now whereas 5-7 years ago nobody had

that. >> the mobile phones and personal tablets have made aware of more what's possible. more and more that happens, the larger the circle becomes, the larger the market becomes, so those families that want their homes orchestrated so they can lock their home with one button press, wake up their home with one button press, have their window shades and thermostats work together so that solar energy is not overburdened the air conditioner. >> we have about a minute left. what is your next goal for control [inaudible] ? [inaudible] 4? >> we have just opened our training center in china. we are expanding internationally. we think we are on the right side of history.

it is emerging markets and we are going after it. >> the president and ceo at control4. we have a quick right to take. a food fight for genetically modified food. ♪

digital security company starting to make waves through strategic acquisition. they provide tracking and monitoring technology to the public and the private sector. the ceo spoke with bloomberg's elliott from the tel aviv stock exchange. in the transition to the electronic communication, we see -- it is a $2

billion per year market. -- you are quite a small company. you are still a very small company. >> we have over 50 employees, but we don't have production in our facility. most of the producm our enginee. cost, you have additional fromacts that can range $10 million t-$200 million. east to themiddle rest of the world, research shows that mobile population may 9ach more than $ billion. ate change is a

challenge for meeting food demand. joining us now is the author of "whyweek's cover story, we will need genetically modified foods." david, we are glad to have you with us. moreure you have gotten reaction from this piece than almost anything you have written in the past. is that true? >> that is absolutely true. what we try to do is really look for and see what the opportunities are with the technology. >> what did you find question ? population ofe the world will be more than nin

9 billion people. climate change is making -- putting many stresses on agriculture. drought is becoming more common. heat stress is becoming more common. in general, the unpredictability of weather is really stressing agriculture. what we argue in this cover story is that genetic engineering of food is one tool, not the only tool, but one tool that could help crops adapt to some of these changes. things i thought the article pointed out that was very interesting was that when we think about climate change, we think about something that is happening very gradually -- average temperatures are not changing very much. you point out that that is not the question in terms of crop damage. it is how many extreme days you get in a given year. we are already experienced that in spades. >> right. one of the most interesting --ngs i found from research

some showing that it is the extremely hot days that is putting stress on corn and wheat and rice. degrees celsius, these crops are really stressed by the heat. it is not the average temperatures so much as the number of extremely hot days. >> david, hold that thought. we're going to be back in a few minutes. more with david and the controversy over the use of genetically modified foods. bob rice is staying with me as well. ♪

>> we continue our conversation with david rodman. he is the editor of the m.i.t. technology review on the controversy over the use of genetically modified foods. david, what about all the people that freak out that say that it is horrible for human beings to eat anything that has in

genetically modified? >> sure. everyone is worried about their food. genetically modified crops have been commercialized since 1996. -- there's known been no documented credible example of health damage from any of these gm crops. >> that's what big tobacco said 60 years ago. there's nothing wrong with it. smoke away. >> sure. sure. the difference here is that genetic engineering is really just a tool. crop comemine crop by example by example, each of .hese new types of plants genetic modification is just a newto put into -- to put traits into these plans. each time you do that, you need to test carefully.

and looked effect case-by-case at each example. >> one of the more interesting things to me about this is -- the reason we has tripled in price is because sony farmers have chosen to move from weeks to corn production because these new hybrid corn seeds are so much more drought resistant. they are therefore much more profitable for the farmer. it is having a major impact on who is growing what in the united states. >> that is right. what we try to do with this article is step back and look at what will be the growing demand for the world in terms of food, in terms of the food demand for the next several decades. see what type of crops, what type of traits would be most important to develop to increase

the food supply. >> what i have seen with some of managers isnd farmland arbitrage from which is something i thought i would never hear as long as i lived. managers are going in and buying up farms that are currently producing wheat bread on the edge of where climate change is also being impactful and switching over to the much more profitable corn crops. that is one of the primary ways in which these managers are making money, buying relatively inexpensive farmlands to make it even more valuable by changing the crops. >> right. one of the reasons we say that we will need genetically , in termsood is that of feeding the growing population, we don't want to use much more land. we don't want to use much more water. make the current farming areas more productive without expanding the agricultural land. >> a very bravely written

article. we thank you very much for sharing it with us. david rothman joining us there -- the editor of the m.i.t. technology review. gm owes, which is really a hot topic. he is got more reaction from this piece than anything else he is written in a year. -- gmo's. is80% of the soil that i already genetically altered. >> whether you like it or not, it is already here. that arbitrage part, it is amazing. washis guy from wyoming telling me about farmland arbitrage. >> so, basically, corn for week. >> that is the trick. wheat farm and grow corn. >> we will have a full update on

the markets. ♪

moves, the on money former wall street tech analyst and now angel investor. also a consistent. he is at columbia universities entrepreneurship advisory board. he will be my guest cohost for the hour. that is coming your way tomorrow on money moves. in the meantime, it is 56 minutes past the hour. julie hyman is there. everything you need to know about traits. that also means that it is positive for this early 2014. a couple catalysts pushing it higher. the growth forecast and empire

manufacturing coming in better than estimated. crossing over into a record , but just barely. in terms of individual stocks, ceoral motors -- the starting her role today says that restructuring costs will eat into gm's bottom line. tesla's stock continuing to rise. stanley wonders if the company can be much more than a carmaker. they plan to build a battery factory. the jpmorgan conference is underway in san francisco. they are discussing the industry and working out a couple deals. linda has been keeping her eye on all the buzz coming to us from the west coast. we have seen a lot of deal activity in this sector.

>> last year was certainly a red-hot year for the biotech sector. will 2014 also be one? interest --vested why question mark there has been such a run-up in biotech stocks. stabilize -- the other reason they're going to look for these golden acquisitions is because they are facing patent expirations and have to figure out some way to generate -- they need to feed the pipeline. already in 2014, we are not at the end of the month, already two big deals. uy thermos or.

fisher. >> you talked about whether glaxo would be buying other companies. >> they were actually doing divestments. those are two consumer drink were sold. i put this question to them. >> here at the conference, you're hearing a lot of chatter about people looking at things. andspect more investments reshaping of businesses rather than large-scale acquisitions. behe thinks glaxo will getting smaller over the course of the next year. the big reason -- they have a lot of their own pipeline that they need to focus on. last year, they got five new drugs approved. not necessarily through buying. >> we appreciate it. we'll have more on the markets

in 30 minutes. street smart starts next. ♪ >> good afternoon, live from bloomberg world headquarters in new york, i am emily chang. >> the first story i want to think about today's bankamerica. their earnings came out this morning. they did so, so well and everybody wants to know why. well, cutting costs. they are cutting that jobs. what does this do for the culture of the company? do people want to work in investment banking anymore? you are in